Property rights in Nigeria

On Wednesday, 26 May 2021, at the constitution amendment hearing for the South-West zone which held in Lagos, the Muslim Congress (TMC) made a demand for the enforcement of the Sharia Law in South-West Nigeria. This demand predictably met with an immediate reaction as the Christian Association of Nigeria demanded for the inclusion of Canon Law into Nigeria’s Constitution. Even more predictable was the fact that for days afterwards, the Sharia demand was a major topic of discussion on social media in the country.

The Sharia discussion is necessary because it shows how low the level of trust is in Nigeria. It also shows the hypocrisy of many of its proponents. How many of them will gladly, today, pack their bags and move to Zamfara, the first state to institute political Sharia in Nigeria?

But the Sharia discussion overshadowed something even more important. It is, perhaps, a coincidence that it is the same Zamfara state did something during the same week that Sharia was being discussed all over the place, and it bears a major conversation, because the Zamfara State governor, Bello Matawalle, revoked all land titles in the state, with the stroke of a pen on 20 May, and asked all landowners to reapply.

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This is a most important story because property rights in Nigeria are insecure, and this is probably the bane of our economic development. I stand to be corrected, but the issue of the Land Use Act was only brought up in one of the constitutional hearings that week, the one in Enugu. That is a problem.

Permit me to quote verbatim, the commentary on this issue in SBM Intelligence’s newsletter of 28 May 2021:

“This is a reminder that property rights continue to remain insecure in Nigeria and are subject to the discretion of public officeholders in many cases. In such an atmosphere, it is not unexpected that investors will take the hint and vote with their feet. The 1978 Land Use Act was supposed to reduce land conflicts among citizens, unify land tenure and land administration procedures, achieve a more equitable distribution of and access to land rights for all Nigerians, and facilitate government control over land use and development at a time when the country was rapidly developing after years of political instability and the Civil War. Unfortunately, it has failed to achieve any of this and has instead concentrated a lot of power in the hands of state governors whom the law made the primary land managers in the country. The uncertainty that this legal regime foisted on property rights has been a struggle ever since. Immense wealth remains locked up in land in Nigeria simply because of how insecure property rights are. Transaction costs are significantly higher than they should be and turn around time as well because of this. What is more, the Zamfara governor may just have created the template for other governors to carry out these types of blanket exercises. All round, this represents a step backwards on the road towards economic development.”

As was predicted in the newsletter of 28 May, on 3 June, the governor of Gombe State, Imuwa Yahaya, revoked land titles in the state’s metropolis to “allow for new developmental layouts.” I don’t know how many can see the danger in this.

One of the things that we do at SBM is advisory for potential investors to Nigeria, and one question that compliance departments never fail to ask us is to explain this Land Use business. In so many meetings and calls, I’ve heard the gears shifting in peoples’ heads as this explanation is taking place, and they inadvertently downgrade their exposure to Nigeria. Basically, what they are thinking is,“if a governor can just wake up and revoke my land because some arcane law allows him to, then why should I spend so much money acquiring that land?

This leads those of them who can work remotely to opt for Ghana, while those who must invest in Nigeria opt for leases. It shows in the numbers.

The image attached to this piece is Nigeria’s rice production from 1960 until right about 2019.

Guess when demand began to irrevocably outstrip consumption?

Around the time the Aboyade Commission began to moot the idea of seizing all the land. Since that bad idea was codified as the Land Use Act (with the exception of the reaction to SAP), we’ve not looked back. You know why? The truly big agric investors will not commit to the kind of investment we need to feed Nigeria, because they don’t want someone to come and just seize their investment just because he can.

Nigeria needs a total overhaul, and the Land Use Act is one of the things that has to go if this country is ever to make sense.

Source: Business Day NG